AER Releases Investigation Report on Well Site Incident Near Rainbow Lake

CALGARY, ALBERTA--(Marketwired - March 3, 2014) - The Alberta Energy Regulator (AER) has issued its investigation report into the May 19, 2012, Pace Oil and Gas Limited (Pace) well site incident near Rainbow Lake that resulted in approximately 800 m3 of crude oil being released into muskeg about 20 kilometres southeast of Rainbow Lake, Alberta.

The AER investigation has concluded that

the company's response to the incident during the first four days was inadequate for the release size,

the release occurred due to a hole in the wellhead piping, and

the wellhead piping was the result of internal corrosion.

On January 9, 2013, the AER issued a high risk enforcement action against the company for failure to have an adequate emergency response plan (ERP) in place. The AER enforcement action follows an audit of the company's ERP that was undertaken as part of the AER investigation.

The AER now requires that the company complete a series of AER-directed actions intended to reduce the potential for further incidents to occur. The company must

conduct an audit of its Rainbow Lake pipeline infrastructure,

submit on a monthly basis all inspection data to the AER related to licensed water disposal and injection wells,

develop a sampling procedure for disposal water,

conduct an assessment of existing disposal systems,

conduct a study to determine whether additional monitoring equipment will further reduce the chance that a similar incident would occur in the future, and

complete an ERP exercise within 90 days of the release of the investigation report.

Failure of the company to complete any of the directed actions will result in additional enforcement action and an escalation of enforcement consequences.

The Alberta Energy Regulator ensures the safe, efficient, orderly, and environmentally responsible development of hydrocarbon resources over their entire life cycle. This includes allocating and conserving water resources, managing public lands, and protecting the environment while providing economic benefits for all Albertans.

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The Alberta Energy Regulator (AER) has released an investigation report into a May 2012 Pace Oil and Gas Ltd. well site incident that resulted in about 800 cubic metres of crude oil being deposited into muskeg southeast of Rainbow Lake. The regulator issued a high risk enforcement action against the company in January 2013 and requires the company to fulfill six AER-directed actions to prevent future incidents from occurring. The full report is available at www.aer.ca.